News of HSBC's (LON:HSBA) $2.5bn ($0.12c a share) buyback is doing its job and offsetting the impact on sentiment from backsliding on key targets, and even a late admission that progressive dividend growth can no longer be aspired to.
HSBC will however have to reinstate a realistic timetable for achieving its lapsed Return on Equity goal of 10% as soon as possible, if investor cheer is to be sustained. (It managed only 7.4% in H1 2016).
Even so, as well as a reaction to a fairly well-flagged capital return, there is a touch of relief in HSBC’s near-4% rally in London at time of writing.
The c.£4bn profit slide to $9.7bn was no worse than reasonable forecasts, and regulatory capital inched up to 12.1%. That means even an ‘unprogressive’ dividend policy is likely to remain viable into 2017. In a world of shaky banks, that counts for a lot.
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